As per SEBI's (WEB) new pledging mechanism, securities pledged by clients do not physically leave their demat accounts. Instead, a pledge is registered in favour of the broker, who must establish a dedicated demat account designated as the TMCM - Client Securities Margin Pledge Account. ( TMCM stands for Trading Member Clearing Member ) Subsequently, the broker re-pledges these securities to the clearing corporation to obtain margins. This approach prevents brokers from misusing client securities since the securities always remain in their demat account. To learn more about pledging, see What is pledging and how does it work?
To learn more, visit zerodha.com/z-connect/zerodha/announcements/understanding-the-new-margin-pledge-system.
